SEC Division of Corporation Finance no-action letter: Tuition Account Investment PR

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Securities Act of 1933 Section 3(a)(2) Trust Indenture Act

No Action, Interpretive and/or Exemptive Letter:

June 26, 2002 Response of the Office of the Chief Counsel Division of Corporation Finance

Re:

Tuition Account Investment Program Fund Incoming letter dated June 17, 2002

Based on the facts presented, the Division of Corporation Finance will not recommend any enforcement action to the Commission if the Treasury Department of the Commonwealth of Pennsylvania (the "Department") and the Tuition Account Investment Program Fund (the "Fund"), in reliance on your opinions of counsel that the exemption from registration provided by Section 3(a)(2) of the Securities Act of 1933 (the "Securities Act") and the exemption provided by Section 304(a)(4)(A) of the Trust Indenture Act of 1939 (the "Trust Indenture Act") are available, offers or sells interests in the Fund ("Fund Interests") in the manner and for the purposes described in your letter without compliance with the registration requirements of the Securities Act or the qualification provisions of the Trust Indenture Act. The Division notes in particular your representation that the tuition account investment program established by the Commonwealth of Pennsylvania (the "Program") has been designed to be treated as a "qualified State tuition program" within the meaning of Section 529 of the Internal Revenue Code of 1986, as amended. The Division does not address the federal securities law implications, including the availability of any exemption therefrom, of any of the investment options as described in your letter. The Division of Market Regulation has asked us to inform you that, based on the facts presented and the representations you have made, it would not recommend enforcement action under Section 15(a) or 15B of the Securities Exchange Act of 1934 (the "Exchange Act") to the Commission if the Fund, the Department, the Tuition Account Program's Advisory Board (the "Board") and the Commonwealth of Pennsylvania (the "Commonwealth"), and their respective officials and employees participate in the marketing and sale of Fund Interests without registering as broker-dealers or municipal securities dealers under Section 15(b) or 15B of the Exchange Act. Those state employees engaged in the promotion of Fund Interests in the course of their official duties will be considered exempt under Section 3(d) as long as they do not receive transaction based compensation for their efforts. We interpret Section 3(d) to cover employees of the Commonwealth as well as the Fund and, based on your opinion of counsel that the Fund is a "public instrumentality of the Commonwealth" and that the Fund Interests are "municipal securities" as defined in Section 3(a)(29) of the Exchange Act, we concur that the Fund is a municipal issuer. Individuals who do not qualify under Section 3(d) because they are not employees of the Commonwealth, such as the members of the Board; or because they are not engaged in these promotions as part of their official duties, such as certain officials of the Commonwealth whose responsibilities are in other areas, will not be considered brokers if they comply with the requirements of Rule 3a4-1. Those individuals who have substantial duties for the Commonwealth
otherwise than in connection with such transactions will be considered to have substantial duties for or on behalf of the issuer other than in connection with transactions in securities for purposes of Rule 3a4-1(a)(4)(ii)(A). Moreover the continuous offering of the Fund Interests will be considered a single offering for purposes of Rule 3a4-1(a)(4)(ii)(C). Finally, if the person qualifies for an exemption under Section 3(d) of the Exchange Act for other offerings, those other offerings will not be considered an "offering of securities" for purposes of Rule 3a4-1(a)(4)(ii)(C). Because we have stated our views with respect to tuition savings plans designed to be treated as "qualified State tuition programs" within the meaning of Section 529 of the Internal Revenue Code of 1986, as amended, we have determined that we will no longer respond to letters in this area unless they present novel or unusual issues.